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August 21, 2022
2022-1265

U.S. Tax This Week for August 19

Ernst & Young's U.S. Tax This Week newsletter for the week ending August 19 is now available. Prepared by Ernst & Young's National Tax Department in Washington, D.C., this weekly update summarizes important news, cases, and other developments in U.S. taxation.

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Top of the Week

Inflation Reduction Act includes 15% corporate minimum tax on book income

On August 16, 2022, President Biden signed into law the Inflation Reduction Act (the Act). For companies that report over $1 billion in profits to shareholders, the Act includes a 15% corporate alternative minimum tax (CAMT) based on book income. The CAMT was originally introduced in the House Ways and Means Committee's Build Back Better Act (BBBA) proposal in November 2021 (House BBBA). It was then modified by the Senate Finance Committee in its December 2021 BBBA proposal (Senate BBBA). As was its purpose in both House and Senate BBBA proposals, the CAMT is primarily a revenue raiser in the Act. The CAMT will apply to tax years beginning after December 31, 2022. EY Tax Alert 2022-1237 has details.

Inflation Reduction Act has state corporate income tax implications

The newly enacted Inflation Reduction Act (H.R. 5376) (the Act), which President Biden signed into law on August 16, 2022, includes a 15% corporate alternative minimum tax (CAMT) based on adjusted financial statement income (AFSI) for corporations with profits over $1 billion (see Tax Alert 2022-1237), a new excise tax on corporate stock buybacks, and increased funding for IRS enforcement. Some of the Act's tax components could affect corporate income taxes imposed by state and local (collectively, state) governments. EY Tax Alert 2022-1246 has details.

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Upcoming Webcasts

Federal tax credits, grants and loans: Understanding what is in the Inflation Reduction Act and Infrastructure Investment and Jobs Act (August 23)
During this EY Webcast, Ernst & Young subject matter professionals will discuss the latest federal incentive developments, including new and expanded opportunities under the IRA.

BorderCrossings (August 25)
During this EY Webcast, Ernst & Young transfer pricing and tax professionals will help you stay informed and able to adopt a more proactive stance in developing and defending your transfer pricing policies and practices.

How will the Inflation Reduction Act accelerate the energy transition? (August 30)
During this EY Webcast, Ernst & Young professionals will discuss energy trends and the outlook for changes relevant to energy transition.

The new stock buyback excise tax and its M&A implications (August 30)
During this EY Webcast, Ernst & Young professionals will discuss their initial impressions of the excise tax, including what they know and don't know, as well as steps that companies might take to prepare for its application.

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Recent Tax Alerts

Internal Revenue Service

— Aug 18: IRS issues guidance on which vehicles qualify for EV credits under the Inflation Reduction Act (Tax Alert 2022-1262)

— Aug 18: EY Technical Line addresses ASC740 tax accounting considerations for the effects of the Inflation Reduction Act and the CHIPS and Science Act (Tax Alert 2022-1260)

— Aug 18: Increased IRS funding from Inflation Reduction Act will likely affect transfer pricing cases (Tax Alert 2022-1256)

— Aug 17: Applicability date for foreign currency regulations under IRC Section 987 extended again (Tax Alert 2022-1248)

— Aug 17: IRS rulings offer private nonoperating foundations informal guidance on making distributions to, and receiving distributions from, nonpublic charities (Tax Alert 2022-1245)

— Aug 16: Inflation Reduction Act of 2022 substantially changes tax code provisions related to energy transition and renewable energy (Tax Alert 2022-1236)

International

— Aug 18: Argentine tax authorities establish a one-time windfall corporate income tax prepayment (Tax Alert 2022-1261)

— Aug 18: Switzerland opens public consultation on material aspects of the OECD's Pillar Two minimum corporate tax (Tax Alert 2022-1259)

— Aug 18: Double tax treaty between Colombia and Japan will be effective January 1, 2023 (Tax Alert 2022-1255)

— Aug 18: Singapore announces new, higher salary requirements for Employment Pass and S Pass applicants (Tax Alert 2022-1254)

— Aug 18: Brazilian tax authority may use information from transfer pricing study in customs valuations (Tax Alert 2022-1253)

— Aug 18: Dubai Customs launches Self-Audit Findings service (Tax Alert 2022-1252)

— Aug 18: Guatemala eliminates COVID-19 vaccination and testing requirements for inbound travelers (Tax Alert 2022-1251)

— Aug 17: Colombia and Brazil signed double tax treaty (Tax Alert 2022-1250)

— Aug 17: Salvadoran Minister of Finance submitted a bill to Congress to establish a tax amnesty program (Tax Alert 2022-1249)

— Aug 17: Hong Kong delays implementation of OECD Pillar Two rules (Tax Alert 2022-1247)

— Aug 17: New Colombian Government submits tax reform bill to Congress (Tax Alert 2022-1243)

— Aug 17: Angola now requires appointments to file applications at three offices of immigration authorities (Tax Alert 2022-1240)

— Aug 16: Canada's Department of Finance releases general anti-avoidance rule consultation and paper (Tax Alert 2022-1235)

— Aug 15: Hong Kong Court holds limited liability partnerships are entitled to intra-group stamp duty relief (Tax Alert 2022-1233)

— Aug 15: Spanish High Court confirms treaty exemption under Brazil-Spain Tax Treaty (Tax Alert 2022-1230)

— Aug 15: UK implements new Customs Declaration Service for imports as of 1 October 2022 (Tax Alert 2022-1229)

— Aug 12: Canada's Department of Finance releases draft legislation for remaining 2022 budget measures (Tax Alert 2022-1225)

Legislation

— Aug 16: Enactment of Inflation Reduction Act extends expanded premium tax credits under the Affordable Care Act (Tax Alert 2022-1238)

States

— Aug 17: Inflation Reduction Act has state corporate income tax implications (Tax Alert 2022-1246)

— Aug 17: New Jersey will likely not impose federal interest assessments on employers in 2022 despite a current outstanding federal loan balance (Tax Alert 2022-1244)

— Aug 15: Puerto Rico's Municipal Income Collection Center extends due date from August 15 to August 31, 2022 for first estimated property tax payment for tax year 2022 (Tax Alert 2022-1234)

— Aug 16: Connecticut second-quarter 2022 SUI tax return deadline extended due to new online reporting system; 2022 federal interest on the state's UI trust fund loan will be paid with federal stimulus funds (Tax Alert 2022-1231)

— Aug 12: Puerto Rico's Municipal Income Collection Center extends due date for property tax return to August 22, 2022 (Tax Alert 2022-1226)

— Aug 12: New Mexico Taxation and Revenue Department proposes regulations "clarifying" that state's Gross Receipts Tax applies to digital advertising services (Tax Alert 2022-1222)

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Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

— New Mexico Taxation and Revenue Department proposes regulations "clarifying" that state's Gross Receipts Tax applies to digital advertising services. On Aug. 9, 2022, the New Mexico Taxation and Revenue Department (Department) issued proposed regulations "clarifying" how receipts from the sale of advertising services to advertisers within and outside New Mexico are subject to the state's gross receipts tax (GRT).

— Texas adopts additional amendments to its franchise tax rule for research and development activities credits. On July 15, 2022, the Texas Comptroller of Public Accounts (TX Comptroller) filed with the Secretary of State the final amendments to its franchise tax rule, 34 Tex. Admin. Code § 3.599 (Section 3.599), regarding the tax credit for research and development (R&D) activities (hereafter, the 2022 amendments).

— Income/Franchise, Sales & Use, Business Incentives, Property Tax, Compliance & Reporting, Payroll & Employment Tax, Miscellaneous Tax

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IRS Weekly Wrap-Up

Final Regulations

 TD 9964Disclosure of Information to State Officials Regarding Tax-Exempt Organizations

Revenue Rulings

 2022-17Section 1274.— Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property
 2022-15Section 6621.— Determination of Rate of Interest

Notices

 2022-34Deferred Applicability Dates for Foreign Currency Guidance

Internal Revenue Bulletin

 2022-34Internal Revenue Bulletin of August 22, 2022

Because the matters covered herein are complicated, U.S. Tax This Week should not be regarded as offering a complete explanation and should not be used for making decisions. Any decision concerning matters covered herein should be reviewed with a qualified tax advisor.

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

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